Exports and imports are the articles shipped from and into a country. The term export comes from Latin words meaning to carry out. The term import comes from Latin words that mean to carry in.
The pattern of exports and imports
Reasons for exports and imports.
A country exports goods under the following conditions: (1) if it is one of the world’s few suppliers of a certain product; (2) if it produces the merchandise at a lower cost than other countries; or (3) if its goods are in demand because of their outstanding quality.
Some imports consist of goods that are not produced domestically. For example, the climate of the mainland United States is not suitable for growing coffee. For this reason, the United States imports coffee beans from Latin America and Africa. Most imports purchased by large countries, however, consist of goods similar to those produced locally but different in price or quality. For example, the United States imports inexpensive Hyundai automobiles from South Korea and luxury Mercedes-Benz cars from Germany, even though other automobiles are produced in the United States.
Reasons for change.
A nation’s pattern of exports and imports tends to change over the years. This change may be due to technological developments. For example, the discovery of synthetic substitutes for such natural products as silk and rubber reduced the need to import these natural products. The development of new products, such as communication devices, often creates new trade patterns because people in all countries want these conveniences no matter what country produces them. Foreign investment, such as building factories in other countries, may enable countries to export products that they previously imported.
Government policies may affect the exports and imports of a country. For example, lowering tariffs allows greater imports of products from abroad. In the same way, lowering of trade barriers by other countries opens markets for exports.
Attitudes toward exports and imports
Popular opinion
within a country usually favors national exports over imports. Many people, particularly local producers and workers, believe exports create jobs. They resent imported products—especially ones that compete with similar products made in their own country. Many people think that imports lower living standards by decreasing job opportunities at home and by causing money to be spent outside the country.
Economists,
in contrast with the public, believe that exports and imports are equally important. To the economist, it is more efficient and economical for a nation to import from abroad goods that are either cheaper or of better quality. The nation can then use its resources, work force, and equipment to specialize in goods that it produces better than other countries—and to export those goods. Further, most economists believe that imports act as a spur for domestic manufacturers to improve their products and cut their costs.
Government policies
Export promotion.
Some governments artificially promote their nation’s exports by giving exporters a cash grant called a subsidy. For example, the European Union, an economic and political association of European countries, guarantees its exporting member nations a minimum price for selling wheat. When the world market price for wheat falls below that price, the union pays the member a subsidy to cover the difference between the lower market price and the higher guaranteed price.
Another artificial arrangement to promote exports consists of special tax incentives. A government may exempt export industries from corporate taxes that other businesses must pay. A government may also increase exports by reducing the value of its currency in relation to other countries’ currencies. Such a reduction makes the exporting country’s goods cheaper for importers—and consumers—in other countries.
Import restrictions.
A common restrictive device is the import tariff, a tax on imports. The United States limits imports chiefly by imposing tariffs. Many other countries restrict trade with an import quota, which sets an absolute limit on imports. Efficient producers may be able to lower their prices enough to absorb a tariff and still export their goods. But no degree of efficiency can help producers when they face a rigid limit on the number of items a country may import.
Developing countries, such as Brazil and India, often use regulations called foreign exchange controls to restrict imports. Such controls limit the payments importers may make to foreign suppliers for certain goods.
Unexpected costs and delays at the customs office are still another type of import restriction. For example, a customs officer may place an arbitrarily high value on certain imports. When tariff duties are based on such valuations, an arbitrarily high valuation imposes unexpected costs on importers. Strict health or safety requirements may also present a barrier to trade.
Government policy toward imports varies with a nation’s degree of industrial development. The economically most advanced nations, such as the United States, Japan, and the nations of Western Europe, tend to favor lowering import restrictions. They want to widen world markets for their exports and to promote economic growth and productive efficiency. Their advanced industries rely on product research and skilled management for competitiveness in world markets. Some of the more advanced developing nations, such as Chile, Mexico, South Korea, Thailand, and some Eastern European nations, reduced import barriers in the 1980’s.
Many of the less developed countries in Africa, Asia, and Latin America still rely on import restrictions. They feel that such protection is necessary for the growth of their infant industries. They point to the importance of restrictions in the past industrial growth of economically advanced nations.
